question archive Three years ago, Jameson and Co
Three years ago, Jameson and Co
Subject:FinancePrice:4.87 Bought7
Three years ago, Jameson and Co. issued 20-year coupon bonds. The yield to maturity at the time of issuance was 5 percent and the bonds sold at par. The bonds are currently selling at 90 percent of par value. What is the current yield to maturity for these bonds? [Assume that the coupon is paid annually]. (Round your answer to 2 decimal places and record as a percent but without a percent sign. For example, record 18.3893 2.71 % as 18.39).
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Answer:
Bond is issue 3 year ago so number of year remains to maturity is 17 year.
Current price of bond = 90% of Par value
= 90% × $1,000
= $900
Current price of bond is $900.
YTM of bond is calculated in excel and screen shot provided below:
YTM of bond is 5.95%.
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